How long ago was it when the banking industry started consolidating? I know it was under Clinton, but even then, the stated goal, if memory serves, was to get down to a smaller number of banks.
The funny thing is, the banks that are in trouble are the ones that did a lot of the consolidating. Bigger isn't necessarily better, especially in this case.
Gramm-Leach-Bliley Act of 1997. It paved the way for approval of the Citigroup/Travelersgroup merger. Citigroup is at the start and finish of this mess.
The banking industry has been consolitdating since 1985; the defense contracting industry has been consolidating since the early 90's. An analogy that one of our executives used was pigs at a trough: when there are too many pigs at a trough, the only way for any of them to stay healthy is for some of them to starve (or be made into bacon).